Mark Zuckerberg's 'shadow bank': The pushback against Facebook's new cryptocurrency has already begun

Facebook announced the launch of its new
cryptocurrency, Libra, on Tuesday. But the critics already have
their doubts.

France's finance minister was among the first to voice
his misgivings over Libra, saying it must not be allowed to
become a "sovereign currency."He has asked
the governors of the G7 central banks to prepare a report on
Libra for mid-July.

Politicians in Germany and Italy also voiced concern,
with one saying Facebook could become a "shadow bank."

European Data Protection Supervisor Giovanni
Buttarelli told Business Insider that he had concerns
over Facebook's push into cryptocurrency, flagging "any further
concentration of personal data" as posing "additional risks to
the rights and freedoms of individuals."

"The proposed launch of a digital coin (cryptocurrency)
by Facebook will require careful scrutiny from several
enforcement bodies, including data protection authorities," he
said.

Within hours of Facebook announcing its new cryptocurrency Libra,
lawmakers in Europe were raising the alarm.

France's finance minister
Bruno le Maire told radio station Europe 1 on Tuesday that he
had no problem with Facebook building a payment system, but the
idea of Libra becoming a "sovereign currency" is "out of the
question."

Le Maire also said that the new cryptocurrency could allow
Facebook to hoover up even more data about users than it already
does. Facebook has said that the financial data generated by
Calibra - the subsidiary it has set up to manage Libra - will not
be shared with Facebook or used to target ads at users.

Meanwhile, German member of the European Parliament
Markus Ferber said the new currency could turn Facebook into
a "shadow bank" which should, "set off alarm bells for
regulators." Italian politician Francesco Boccia similarly voiced
concern, tweeting
that Libra would join the existing cryptocurrencies "without
regulation."

While Facebook has presented Libra as well shored up, with 27
companies including Mastercard, Uber, and Andreessen Horowitz
ranking among the "founding members," regulatory scrutiny still
has the potential to sour things for Facebook.

"We recognize the potential of new technologies, including, as in
the case in question, new applications, which aim to provide
financial and ecommerce services in new or efficient ways," he
told Business Insider on Tuesday. "However, any further
concentration of personal data poses additional risks to the
rights and freedoms of individuals - so the proposed launch of a
digital coin (cryptocurrency) by Facebook will require careful
scrutiny from several enforcement bodies, including data
protection authorities.

"It would be deeply concerning, for example, for a company with
access to massive volumes of personal information, gathered
through its social media platforms and communications services,
to be able to combine this information with the tracking of
online digital purchases," he continued.

"The history of the last 15-20 years indicates that only where
there is genuine competition will service providers compete on
data protection standards," Buttarelli said. "One of our big
challenges, therefore, is actually to determine how we can
de-concentrate markets and give a boost to start-ups and others
seeking to promote privacy by design solutions, so that
individuals and business clients have more choice in trusted
service providers or commercial partners than just a handful of
companies with problematic business models."